Charles Hoskinson says Cardano could cure cancer and it wouldn’t make any difference right now.

Key points

• Crypto is so volatile that people were initially reluctant to call this a bear market. After six months of downward price action, it’s time to call it what it is.
• Cardano’s founder tweeted that it doesn’t matter what the project does right now — no announcement, even an incredible one, will make any difference.
• Avoid panic selling during a bear market. Selling now will lock in your losses and mean you won’t benefit from any eventual upturn.

In the stock market, people start talking about a bear market when prices decline by more than 20% and there’s a widespread sense of pessimism. In the volatile world of crypto, prices can often rise or fall by 20% in a week, so that definition doesn’t work.

But it’s not surprising that various industry experts and key players are now talking about a crypto bear market. After all, Bitcoin (BTC) is trading at over half its all-time high and various smaller altcoins have fallen even further. Plus, we’ve seen over six months of falling prices and sideways price action

This includes the founder of Cardano (ADA), Charles Hoskinson, who tweeted about the crypto’s price action, noting that even miraculous happenings won’t improve the market right now. “Yes, it’s called a bear market,” he said. “That’s what happens. Nothing changes it. No announcement makes a difference.”

Hoskinson, who has a reputation for straight talk on social media, went on to say that Cardano could cure cancer or create a personal poker playing robot that drives grandma to church and the price of ADA would still fall.

How long will the bear market last?

Understandably, the many crypto investors who’ve seen their portfolios decimated want to know when the pain will end. The trouble is that nobody has a crystal ball and we don’t know when the factors that are driving prices down will change. Bear in mind that the world is dealing with the aftermath of a global pandemic. While there are patterns and we can make some guesses based on past performance, much of what’s happening now is unprecedented.

One well-known crypto investor and guru, Raoul Pal, told Cointelegraph the bear market won’t end until the Federal Reserve eases up on its economic tightening measures. The Fed is raising interest rates in an effort to curb inflation, which is one of the big drivers for the current crypto price devastation. Not only has it sparked fears of a recession, there’s a lot less money available for riskier assets like crypto.

It’s also worth noting that bear markets are a normal part of investment cycles. According to Seeking Alpha, there have been 26 bear markets in the S&P 500 since 1928. Crypto has also seen its fair share of prolonged price dips, even in its short history. At a wider level, these periods of correction can be healthy too. A number of crypto executives told CNBC recently that this bear market could help to wipe out bad actors.

This knowledge may not reassure crypto investors, especially new ones, who are trying to make sense of the losses and worrying that the entire industry could fail — as could individual projects in their portfolios. However, understanding that this too shall pass can make it easier to hold on through tough times.

How to handle a crypto bear market

Cryptocurrencies are high-risk investments and there’s no sugar-coating the fact that some will not survive long term. The high risks are the trade off for the high potential returns of putting money into a relatively new technology. For long-term investors, there’s a good chance that the rewards from successful projects could eventually make up for any losses from failed cryptos.

Certainly, when we analyzed how top cryptos from five years ago had fared, we found that many of the top 50 cryptos from 2017 are not around today. However, the huge gains from the ones that did make it mean that if you’d invested $100 in each of the top 50 cryptos in 2017, your portfolio would be worth $40,000 today. There are no guarantees that the next five years will play out in the same way. Nonetheless, it’s a strong reason to view your crypto investments through a five, 10, or even 20-year window.

As a crypto investor, the most important way to survive a bear market is to avoid panic selling. That’s not to say you should never sell. There are times when selling your crypto may make sense — such as to take profits or because you no longer believe in a project’s fundamentals. But selling during a marketwide price drop will often only lock in your losses and stop you benefiting from any eventual recovery.

Some people will try to buy the dip and pick up additional assets at a discount. Whether this is right for you depends on your long-term view of crypto and your own financial situation. If you’re trying to pay down debt or don’t have an emergency fund, you have more important financial priorities to handle first. Similarly, if the recent crash has shaken your faith in crypto, buying more probably isn’t the best plan. But if you’re still comfortable with the risk and have some cash you don’t need for other goals, it may make sense.

Bottom line

Bear markets are not fun, but they are part of investing. It doesn’t help that there are a lot of unknowns about what will happen next on the rollercoaster ride that is cryptocurrency investing. Ultimately, the best way to survive is to only invest money you can afford to lose and ensure crypto only makes up a small portion of your portfolio. That way even a complete market crash won’t derail your finances.